-5- 



In the productive period when trees are bearing ordinary and necessary 



expenses cannot be capitalized. Wlien the orchard reaches the productive period 



these expenses are deducted each year when they are incurred , if you report 



on the accrual basis, or when they are paid if you report on the cash method. 



Depreciation on commercial orchards (Investment in trees aside from the 

 bare land) Is allowed upon reaching producing age if on a reasonable basis. 



If an orchard has been grown by the present owner and the costs deducted 

 on previous income tax returns as annual operating expenses , then depreciation 

 cannot be justified because the costs have already been charged off once. 



Xf a bearing orchard Is purchased , the new owne r may start taking deprecia- 

 tion on its cost to him. 



There are no nationwide or even statewide "official" rates for calculating 

 orchard depreciation . The taxpayer should use his beet judgment in estimating 

 the probable length of the productive life of his orchard. 



The cost of setting out new orchards should be handled as follows: 



1. Amounts spent in setting out new orchards must be treated as capital 

 investments , rather than as current operating expenses. 



2. The taxpayer may treat as e ither capital investment subject to 

 depreciation or as current operatiug expenses such expenditures during the 

 development neriod of orchards as, those for cultivating spraying and taxes; 

 and most farmers find it more cohvenient to treat such expenditures as current 

 operating expenses. 



, \ •■ ^ ---L. D. Rhoades 



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POMQLCGICAL PARAGRAPH 



Winter Injury to Peach Trees 



Peach trees in many orchards in the state are showing considerable dieback 

 at the tips of branches from winter injury. There are some trees completely 

 dead. Many trees only have about 30 to 50 per cent of normal leaf surface. 



Growers should not prune peach trees until full extent of the damage has 

 been determined. A hot, dry summer might result in wilting and dying of the 

 new shoots and leaves due to the inability of injured cells to conduct sap 

 from the roots. By the time the amount of the winter injury has been determined, 

 the grower might as well wait until next spring to prune unless he is particularly 

 anxious to prune out the dead wood. If any pruning is done this summer cut out 

 dead wood only . It is vital to save all the leaf surface on these injured peach 

 trees in order that they have the fullest opportunity to make recovery. 



---W. J. Lord 

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